At enrollment time, you’ll need to determine if you are eligible for benefits. You’ll find eligibility information in your employee benefit guide. If you are benefit eligible, then your spouse and eligible dependents may also be eligible. If you are eligible for benefits, you should go through the enrollment process to enroll or decline each of the benefits you are eligible for.
In this article, I review who is and who is not eligible for employee benefits.
What Makes You Eligible for Benefits?
Eligibility for benefits is dependent on your employment status with your employer.
Benefits are typically offered to:
- Full-time salaried employees
- Full-time hourly employees
Part-time employees may also be eligible for some benefits.
How Many Hours a Week Do You Have to Work to be Eligible for Benefits?
The Affordable Care Act mandates that employers with 50 employees or more, offer health insurance to employees who work at least 30 hours per week. Many employers use this 30 hour rule for to determine eligibility for all benefits.
Different Benefits May Have Different Eligibility Requirements
Most employee benefit eligibility is based on being eligible for health insurance. However, benefit eligibility may vary depending on the employee benefit offered.
Here are some examples:
- Retirement plans: 401K plans may have a longer eligibility waiting period and age requirement.
- Flexible Spending Accounts (FSA’s): Flexible spending accounts may have a one year wait before an employee can enroll. This is because the employer advances funds in a medical FSA and they wouldn’t want employees to exhaust their FSA and then immediately terminate.
- Voluntary group benefits: Group benefits like accident insurance, critical illness insurance and hospital indemnity insurance may have only require an employee work up to 20 hours per week in order to enroll. In addition, group term life plans may limit the dependent children to age 19 unless a full time student. These plans may also require that the employee be actively at work on the effective date.
- Whole life insurance plans: In addition to requiring fewer hours to be eligible, whole life offers will often let additional dependents enroll like grandchildren.
Who is Not Eligible for Benefits?
There are some employees that are not eligible for benefits. They would include:
- Part-time employees who do not work at least 20 hours per each and every week
- Seasonal employees
- Temporary employees
- PRN employees (employees who work as necessary)
It’s not unusual for employees to work enough hours some weeks but not others. It’s this irregularity that keeps employees in this situation from being eligible.
Who are Eligible Dependents?
Once an employee is eligible, their dependents may also be eligible for benefits as well. Eligible dependents would include:
- Your legal spouse.
- A domestic partner (if required by law or allowed by the plan).
- Dependent children to age 26.
- Court ordered dependent coverage.
- Dependent child disabled before age 26
Sometimes employees will enroll dependents during open enrollment who are technically not eligible. To prevent this, employers will occasionally audit the eligibility of dependents enrolled in their plans or verify eligibility at time of enrollment.
Dependent Eligibility Audits
Employers from time to time conduct dependent eligibility audits. These audits will ask employees to verify that their dependent are who they say they are. These audits uncover:
- An employee enrolls a person as their spouse but they are not legally married to that person.
- Spouses who would be excluded under a spousal carve out provision because the spouse has coverage available at their employer.
- Dependent children who are not the employees children but are nieces, nephews and grandchildren that they have not adopted.
During a dependent audit, employees will have to provide documentation to prove their relationship with their dependents. If they are not able to verify their eligibility, these individuals will be removed from the plans.
It’s been reported that 3-10% of plan members may not be eligible which is why many employers conduct such audits.
Additional Underwriting Requirements May Be Required
Some benefits like supplemental group term life insurance may require additional underwriting approval before your enrollment is approved. So, while you may be an eligible employee, you may still need to qualify for certain benefits by providing answers to medical questions through an evidence of insurability form.
If you are not approved by the insurance company, you won’t be eligible to enroll in that benefit.
Change in Employment Status
Employees who may not be eligible at open enrollment, may have a change in employment status that makes them eligible for benefits mid plan year. This change in status may be going from part time to full time.
Employees who become benefit eligible are considered newly eligible and will need to go through a newly eligible enrollment process.
Qualifying Life Events
Employees who lose coverage mid plan year, may be eligible for a qualifying life event special enrollment period.
The Eligibility Waiting Period Must be Satisfied Before Benefits Go Into Effect
Remember that benefits go into effect at the end of your eligibility waiting period if you are new hire or newly eligible employee.
Conclusion
These are some general guidelines as to who is eligible to enroll in employee benefits. You’ll need to check with your employer and their insurance carrier partners for specific eligibility requirements.
